‘Friend of China’ Larry Summers warns Beijing that its actions are making it difficult to push for higher relations

That bipartisan sentiment makes it a challenge for individuals who need to push for a more cautious, less aggressive approach to the world’s second-largest economy, similar to former U.S. Treasury Secretary Larry Summers, who was instrumental in getting China to hitch the World Trade Organization can join. (China officially joined the international body in December 2001). “I am an admirer and friend of China in many ways,” Summers said in a virtual conversation with Clay Chandler. Assets‘s Asia editor-in-chief on the Fortune Innovation Forum in Hong Kong on Thursday.

The U.S. and China “really have no choice but to find one.” lifestyle for cooperation if one among them is to achieve success,” he said. “I have a very hard time imagining scenarios in which the U.S. is very successful while China fails, or in which China is very successful while the U.S. fails.”

Summers compared the U.S. and China to “two guys who don’t particularly like each other, don’t know each other particularly well, and are in a lifeboat that requires two oars, in a very turbulent sea, far from the shore.” “

Still, Summers said a few of Beijing’s actions don’t make it easy for individuals who are more cautious toward China to advocate for improving relations.

“I have to say that China sometimes seems to be doing its best to make it difficult to be less confrontational or containment-oriented in political debates in the West,” he said. “What … comes from China makes it much more difficult for those of us who value negotiation and cooperation.”

Relations between the US and China have been in a downward spiral since former US President Donald Trump imposed high tariffs on imports from China. The Biden administration has largely chosen to maintain it Trump’s tariffs.

In recent years, Washington has blocked the sale of advanced chips and chip-making equipment to Chinese corporations and banned U.S. investments in Chinese corporations operating in sectors similar to quantum computing, AI and semiconductors. The US can be encouraging corporations to de-risk their supply chains from China and relocate their operations to other countries, including those friendlier to the US

Chinese officials have even attacked these policies as violations of world trade rules File submission on the WTO.

Summers predicted that these claims would fall on deaf ears because China itself relies on industrial policies, protectionist measures and subsidies. “I don’t think China is in a position to complain about industrial subsidies…[and] Nationalist economic policy,” he said on Thursday.

Cooperation with allies

The Biden administration says it’s more open to working with allies to contain China, unlike its predecessor. The United States, for instance, persuaded Japan and the Netherlands to impose their very own controls on the sale of chip-making equipment to China.

But domestic political pressure could undermine these efforts. US politicians, including President Biden, have attacked Japanese steelmaker Nippon Steel’s $14 billion deal to purchase US Steel on national security grounds.

Nippon Steel, for its part, has tried to defend its acquisition by claiming it could create a steel giant that might compete with China.

Summers had previously criticized attempts to dam the deal. “There is no remotely plausible national security reason to question the Nippon-US Steel transaction. “Japan is a loyal ally,” he said BloombergTV in January.

The economist again alluded to the concept of ​​keeping US Steel in domestic hands on Thursday. “The U.S. employs more than 60 times as many people in industries that use steel as in the steel industry,” he noted.

“When we do things that drive up the price of steel with various kinds of economic constraints, we have to think very carefully about whether we are helping or hurting American workers broadly,” he continued.

Where are relations between the USA and China heading?

Other speakers on the Fortune Innovation Forum noted that despite trade tensions, there are still some positive trends in U.S.-China economic relations. On Wednesday, Chinese President Xi Jinping met with U.S. CEOs following the China Development Forum, Beijing’s summit for Chinese officials and foreign business leaders.

“This year, too, there has been less criticism from Washington of U.S. business leaders doing business in China,” Ben Harburg, managing partner of world investment firm MSA Capital, said Wednesday on the Fortune Innovation Forum. “That kind of narrative that doing business in China is treacherous has been toned down a little bit, and that has given people a little more confidence to show what they can do.”

Washington and Beijing have worked to revive ties in recent months, including a summit between Xi and Biden last November.

Graham Outside FORTUNE

However, speakers on the Fortune Innovation Forum expressed concerns about predicting that US-China relations would improve within the foreseeable future.

“The geopolitical situation will not really improve. If anything, I think I will be very happy if the situation doesn’t get any worse,” Victor Fung, chairman of Fung Investments, said on Wednesday. Fung, who ran supply chain management firm Li & Fung, predicted that “geopolitical repression” could lead on to “total fragmentation” of supply chains to forestall direct trade between China and Western markets.

Harburg predicted that US policy could again negatively impact relations with China. “Trade tensions are going nowhere and will continue to worsen as the years go by,” he said, “especially as we enter an election cycle where everyone is vying to see who will take tougher action against China.”